Biggest AI Drop Since ChatGPT Was Released

AI chose violence

The Bespoke AI Basket that's made up of 50 key AI stocks was down 5.6% over the last two days coming into Friday, which was the biggest 2-day drop since ChatGPT was released in late 2022.  

Source: Bespoke

Where is my ROI, Jensen...?

Change in AI investment estimates exceeds sales and earnings boost.

Source: Goldman

Tech analyst optimism: Peaked?

Nasdaq 100 analyst optimism has topped out, undermining price performance.

Source: Soc Gen Cross Asset

That Tech P/E expansion

US forward tech PE is stretched at 32x. Tech relative price rise is way beyond rel eps and so leaves the sector vulnerable.

Source: Soc Gen cross asset

Narrowing EPS growth differential

In terms of Big Tech vs. median S&P 500 stock.

"AMZN, GOOGL, META, MSFT, and NVDA are collectively expected to grow 2024 profits by 37% compared with 5% for the median S&P 500 stock. But we have previously noted that consensus estimates of sales growth for the five stocks is forecast to slow from 22% year/year in 1Q 2024 to 17% in 2Q, and further decelerate to 16% in 3Q and 14% in 4Q. NVDA sales growth is expected to slow from 262% year/year in 1Q to 111% in 2Q, 73% in 3Q, and 56% in 4Q. In contrast, sales growth for the median S&P 500 stock will be accelerating, albeit from a slower pace (year/year growth of 2%, 3%, 4% and 5%)."

Source: David Kostin

Semi vs Nasdaq P/E

Still room for correction...

Source: Macrobond

NVDA now under-shooting...

That was quick...Chart shows NVIDIA price and 12M fwd EPS.

Source: Macrobond

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